US oil prices dip on rising crude inventories, record output

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"The weekly report from the EIA on US oil stocks was bullish for outright prices, plain and simple", said Tamas Varga, an analyst at PVM Oil Associates Ltd.in London.

Helping to underpin prices are the OPEC-led supply cuts and Washington's sanctions against Venezuelan crude exports.

With fresh sanctions potentially looming, a flotilla loaded with about 7 million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest US sanctions and others whose buyers are weighing who to pay, according to traders, shippers and Refinitiv Eikon data.

Brent crude, the global benchmark, slipped 49 cents to $61.49 a barrel as of 1053 GMT.


Moreover, Venezuela is struggling to export oil because of USA sanctions in support of "interim president" Juan Guaidó, who is challenging the incumbent Hugo Chávez.

US West Texas Intermediate (WTI) futures were at $55.13 per barrel, down 13 cents, or 0.24 percent, from their last settlement.

Crude inventories rose by 2.5 million barrels in the week ended February 1 to 448.2 million, compared with analysts' expectations for an increase of 2.2 million barrels.

"We expect the oil price to rise in the first-half of 2019 on tightening supply conditions and decline in the second-half on weakening economic activity and an increase in USA crude exports to global markets", said French bank BNP Paribas.


Oil prices have been on the rise since the US Treasury announced the seizure of $7 billion in assets of Venezuela's state oil firm PDVSA and its US subsidiary Citgo last week. "Moreover, lower oil prices - prices were between 14% and 18% lower in January than their 2018 average - are likely to stimulate economic activity and oil demand, particularly in emerging markets", said Jean-Pierre Durante, Head of Applied Research at Pictet Wealth Management. Venezuela, an OPEC member, is like Iran and Libya exempt from making voluntary curbs under the deal.

-China trade war, which has dragged on world markets as investors worry that the dispute could contribute to a potential global economic slowdown. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January. The daily average exports of crude oil over the past four weeks were about 2.5 million barrels, up by about 1 million barrels per day year-on-year.

"The market is being boosted by optimism over the higher-level trade talks between the United States and China that were completed on January 31".


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